For many insured Americans, the first tangible benefit of President Obama's signature health care law recently landed in their mailboxes: a check from their insurance company.
“There are a variety of incremental ways that people are learning that the Affordable Care Act will be helpful to them,” said Ron Pollack, the president of Families USA, a liberal health care advocacy group. “The rebate checks will be a part of that.”
Still, despite that enthusiasm, the arrival of the rebates is unlikely to shift public perceptions in a major way. The policy has affected only a small percentage of Americans, not everyone is getting a direct payment, and the average size of the rebates is modest.
The health reform law limits how much of their customers’ premiums they can pocket for overhead and profits. Under the law, insurers must pay either 80 or 85 cents of every dollar on medical care. The insurers who fail to meet this target—called a medical loss ratio—are required to give their customers a refund for the difference and send them a letter specifying that the rebate is thanks to the health reform law.
Nationwide, the total rebates sound large. The Health and Human Services Department says that insurers owe Americans a total of $1.1 billion. But that number gets smaller once it’s spread out. Just under 13 million policy holders got rebates, about 5 percent of the U.S. population, or 10 percent of all households. The average refund was $151, but many Americans who get insurance through their employer received only a fraction of the total refund amount. (Washington, D.C., residents were more likely than most to get a rebate. Seventy-eight percent of employees working for large businesses were eligible.)
Many individual beneficiaries were delighted to get a refund. “It was like, finally, I’m not asked to shell out more money for health insurance,” said Morgan Theriot, 43, a self-employed human resources consultant from Silver Spring, Md., who got a $260 rebate check last month. “Finally, something is due back to me.”
But not everyone who got a check is now singing the praises of the health care law. Theriot said she had a client who was opposed to the law and got a $300 check. That woman said she’d be making a $300 donation to the Republican Party.
Not everyone is getting a check, either. People who buy their own policies, a small fraction of the market, will get a rebate directly from their insurer. But insurers will send rebates to employers who provide coverage for their workers. By law, employers are required to use the money to benefit their employees, but they have used a variety of strategies to do so, according to Tracy Watts, a partner at the employee benefits consultancy Mercer.
“In terms of employers’ actions, it is a mixed bag,” Watts said. “Some have actually cut checks and sent them to employees. Some have given a premium credit. And some have given employees extra money in their paycheck. I’m aware of one employer who put the money into a wellness fund that benefits employees.”
Watts said that many employers passing rebates along to their workers are not handing over the full amount. Since employees, on average, pay about a quarter of their insurance premiums, employers are tending to refund a prorated amount, a fraction of the average $151 amount.
Polling from the Kaiser Family Foundation suggests that some combination of news reports and letters in the mail has raised awareness of the law’s provision. In its August Health Tracking Poll, 42 percent of those asked knew about the refund provision, up from 35 percent in March. Sixty-two percent had a favorable view of the rebate provision.
Cynthia Cox, a policy analyst at Kaiser who has studied the issue, said this evidence suggests that the word is getting out about a popular provision. “More people may be aware of it than actually got the rebate,” she said.